Prepared for $65 per barrel crude oil price range for FY26: OIL CMD Rath

Drilling begun in Cambay Basin, second well dug in Andaman seas

National exploration and production major Oil India Ltd (OIL) wants to quickly monetise offshore assets in the Cambay Basin, and is hopeful of lower statutory requirements helping exploration in the offshore KG  Basin, OIL chairman and managing director (CMD) Ranjit Rath told Prachi Pisal in an interview in Mumbai. Edited excerpts: 

 

For the rest of 2025, what is your outlook on the global crude oil prices?

 

We are aware of the volatility that comes along with the crude oil price, but what we don’t know is the extent of volatility. Having taken note of what we have witnessed in the first two-months of FY26, and then the outlook that is in the offing, we are prepared for a $65 per barrel crude oil price range. It is more about the preparedness for this degree of volatility rather than getting surprised. 

 

Any update on OIL’s plans to begin exploration in the nine blocks that you won in the latest round of bidding for oil and gas assets?

 

We have about 40,000 square kilometres of area, out of which we have two blocks in the Cambay Basin, Gujarat and two in Meghalaya. The efforts for drilling in the Cambay Basin have already started. We want to monetise it faster because we have already reprocessed the geophysical data that is available.

 

We have five blocks in the offshore Mahanadi and Krishna Godavari (KG) basins, which are deep and ultra-deep water. We have already initiated the process for carrying out 2D and 3D seismic surveys for the blocks in the Mahanadi Basin. We are geared up and looking forward to fast-tracking these activities. In the KG Basin, we see a lot of opportunities that are time-saving since the statutory requirements and the interface are much for an offshore block. 

 

You have been bullish on the prospect of foreign partnerships. Which areas are you targeting?

 

We are looking at international oil companies (IOCs) and overseas national oil companies (NOCs). We have signed an MOU with Petrobras, where we are looking at the data together and are requesting them to partner with us in our Open Acreage Licensing Policy (OALP) IX round blocks, and the OALP X bidding round that's set to take place. There are several such assets that we are looking at right now, and we will continue to evaluate the opportunities.

 

We are also exploring the shallow waters of the Andaman Nicobar Basin, where we have already drilled a well, and a second well is being drilled. We are seeking partners there as well, not only to de-risk our investment but also to gain access to the technology. 

 

The company had targeted 4 million metric tons (mmt) of crude oil production in FY25, but output stood at almost 3.5 mmt. How do you look at this?

 

4 mmt is a target that we want to achieve by FY27. We are drilling deeper and doing near-field exploration. We are identifying additional prospects that bear more potential. We have carried out more than 40 geological studies and have identified 90 such drillable prospects. These drillable prospects will convert into shortlisted well locations, which will give us these numbers. Our target remains 4 mmt. 

 

What about your recent foray into Tripura?

 

We have an open-access licensing policy block in Tripura. We have also discovered a small field. There were initial hiccups amid geographical disadvantages like heavy rains. Hence, there was a delay in the mobilisation of the drilling grid. Now, we have started the drilling. We are hopeful of not only quickening the production of natural gas to monetise the Discovered Small Field (DSF) block, but also the evacuation purposes. We have also started building a connecting pipeline for that. 

 

Has the company met its annual well drilling target?

 

This year, our target was to drill over 70 wells, but because of certain constraints and a month of flood, we drilled 59 wells completely, and 10 such wells were at various stages as of FY25. We drilled deeper wells and tested more sand.   

  What are your expectations from natural gas prices? 

Natural gas prices are currently quite stable due to the existing gas policy. At present, we are receiving about $6.5 per MBTU, which will increase by another 20–25 cents. This is an add-on, taking the price to $6.75 approximately. New gas reserves have been identified, and the Government of India will carry out the allocation process. Once allocated, we expect to receive a 20 per cent premium on that gas. Overall, we have a positive outlook.

 

Could you shed some light on your FY25 performance in terms of production and margins? 

FY25 was an excellent year for us. We recorded about 10 per cent growth in our consolidated profit after tax (PAT), which stood at ₹7,039.63 crore. We produced 6.71 million metric tonnes of oil and oil equivalents — our highest ever. We also achieved record natural gas production. With stable gas pricing, our revenue stream from gas was also strong. While exploration costs dented our operating margin, our EBITDA remained robust.

 

There was a slight dent in revenue from operations in FY25. How should we interpret that? 

The primary reason was lower realisations. Operational expenses and drilling durations also tend to increase as we drill deeper. However, with increased production, some of that impact was mitigated. 

 

What pulled down the realisations? 

There was a clear drop. In FY24, our realisation was around $83 per barrel, which fell to $78 per barrel in FY25. This was due to a drop in global crude oil prices, to which our operations are benchmarked. Despite the fall, we performed well due to higher production, improved revenues from both crude oil and natural gas, and 102 per cent capacity utilisation by our major subsidiary, Numaligarh Refinery Ltd (NRL).

 

In NRL’s case, we achieved a spread of $7.8–7.9 per barrel for motor spirit (petrol) and over $11 per barrel for diesel. This contributed ₹1,600 crore as PAT from NRL and a gross refining margin of $5.14. For FY26, we first need to assess the crude oil outlook before estimating realisations. FY24 saw realisations of $83, which fell to $78 in FY25, hence the subdued profit growth. We will have to wait and see how FY26 unfolds. 

 

For FY26, how much capital expenditure has been planned? 

We are planning a capex of about ₹7,600 crore. Including NRL, this will total around ₹9,000 crore, due to the ongoing capacity expansion at the refinery, which is expected to be commissioned this year. In the oil segment, exploration and production are entirely capex-driven. We have also earmarked ₹1,200 crore for refurbishing vintage infrastructure in Assam — a two-year project.

 

Has the situation in Bangladesh affected the Numaligarh refinery? There were challenges in moving over-dimensioned cargo. Any update? 

No issues have been reported. We have the Indo-Bangladesh Friendship Pipeline with a 1 million metric tonne capacity. There have been no disruptions so far. We use inland water transport effectively for cargo movement and have successfully transported most over-dimensioned consignments (ODCs) to the site. As long as water draft conditions are favourable, we do not anticipate problems. 

 

What are the company’s debt levels? 

Our debt position is healthy and largely tied to overseas investments. It is dollar-denominated, and future cash calls for these assets will be met through earnings from other fields. In two of our Russian assets, we have already received over 100 per cent dividend returns from one, and about 84 per cent from the other. We also have an asset in Mozambique. Revenues from our other operations will be channelled there and will not impact our domestic operations. 

 

Going ahead, what kind of revenue mix are you targeting between oil and gas? 

The current ratio is likely to continue. In FY25, oil revenues stood at around ₹15,000 crore, and natural gas at over ₹5,000 crore. This trend should persist. However, if we realise better crude oil prices, the oil component could rise, since gas prices are now relatively fixed.